Paying PDV (VAT) on a commission of travel agencies
According to the provisions of Article 17., paragraph 1. of the Law on Value Added Tax (NN 73/13 and 99/13 by the decision of Croatian Parliament, hereinafter referred to as the Act) the object owned by the tax payer that acts as one, where services are being provided, is considered to be the seat of an tax payer. According to law , the tax payer is every person that does any kind of economical activity even if that person is not registered in VAT register.
According to the Article 154., paragraph 4. of the Regulations of the Value Added Tax (NN 79/13 and 85/13) every tax payer that has a seat, permanent establishment, a residence or usual residence in the Republic of Croatia and that offers services at the area of the other state members for which the recipient of the services in another member state, is obligated to pay VAT according to article 196. Council Directive 2006/112/EC and every tax payer as a service recipient from article 75. paragraph 1, point 6. of this law is obligated to register within Tax Administration and to file a claim to issue VAT ID number at least 15 days before starting to do or to receive that kind of service.
Thus, a small tax payer in this case a citizen-private renter, that has residence in the country, is obliged to apply for VAT ID number in a case when the services for him are being done by the tax payer that has a seat in other Member State.
That is why, in a case of a small tax payer, a citizen that is a private renter has granted VAT ID number, then a foreign tourist agency won’t charge VAT on the services of mediation, but private renter will be obligated to charge and pay Croatian PDV with 25% rate.
Also tax payers that apply flat tax rate under special regulations are considered to be small tax payers, and they are obligated to request the issuance of VAT ID number in the case when the services are being done by the tax payers that have a seat in other Member State. When it comes to flat tax payers it must be known that even after VAT ID number has been dedicated, they still can apply flat taxation on special conditions.
Small tax payers, for example citizens-renters, or tax payers that apply flat rate taxations, aren’t entitled to deduct VAT, that they have calculated on the service provided by the tourist agency from the other Member state, considering the fact that they aren’t registered in VAT payers register.
For the accounting period in which the travel agency from the other Member state provided the service for the citizen-renter or for the tax payer that applies flat tax rate for which he is obligated to calculate and pay VAT, citizen- renter or tax payer that applies flat tax paying will be obligated to file a form Obrazac PDV i Obrazac PDV-S in which the provided service is shown.